Streaming music is slowly cannibalizing digital download sales

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apple, spotify, music, rhapsody, streaming, digital downloads

The music industry was flipped on its end more than a decade ago as the advent of digital music led to huge sales declines. Sales appeared to stabilize around 2011 and 2012 but then along came another disruptive force - streaming music.

Recent figures released by Billboard and Nielsen reveal a 4.6 percent decline in overall album and track sales during the first half of 2013. Broken down further, we find that sales of digital downloads dropped 2.3 percent while sales of physical CDs fell by 14 percent. The total number of mid-year streams, however, increased by 24 percent.

None of this is good news for the current top music retailer, Apple. But unlike the transition from CD to digital which saw a spike in music piracy (and a drop in sales), streaming music is still a viable revenue source for artists and record labels.

Services like Rhapsody, Spotify and Pandora all offer access to a huge catalog of music free of charge in exchange for ad placement or other restrictions. Alternately, most services offer a paid subscription model that will do away with restrictions and even allow for streaming via mobile devices. It may not be as lucrative as the old days of selling CDs and cassettes or the $0.99 downloads but it’s better than nothing.

Streaming appears to be the method of choice moving forward although Apple’s upcoming iTunes Radio will attempt to recharge the digital download industry while at the same time collecting revenue as a streaming provider.

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